The Productivity Commission says around half a billion in spending on NT child protection has been used inefficiently.

Draft findings from a Productivity Commission inquiry reveal uncoordinated and scattershot approach to funding the Northern Territory's child protection sector.

It comes after the Royal Commission into the Protection and Detention of Children in the Northern Territory called for an audit of all money directly spent on the statutory protection of children.

The Productivity Commission has, for the first time, audited the $538 million spent annually by the Commonwealth and Northern Territory governments on child protection service delivery.

“Despite these significant resources, governments are making short-term funding decisions in relative isolation, without a good understanding of the needs and priorities of communities [or] existing services funded by other government agencies,” the report said.

“This is a barrier to understanding where money is being spent and to governments making informed and coordinated funding decisions for individual towns or communities.”

Funding flows from nine government agencies, via more than 700 grants, to around 500 service providers.

“There are a lot of programs operated by both tiers of government that are actually quite similar in practice,” Productivity Commissioner Michael Brennan said.

The report found that the poor coordination of resources can be overcome.

“Importantly, our proposals are about better use of existing funding, rather than changes in the overall level of funding,” the report said.

One of its major recommendations its for an “explicit commitment” by both governments to report on reforms in a transparent way, and for the NT Children's Commissioner to take on the role of an oversight authority.

The draft report is accessible here.